EXHIBIT 99.1
CROWN VANTAGE INC.
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
SALE OF BERLIN-GORHAM FACILITIES
The following Unaudited Pro Forma Condensed Statements of Income for the
three months ended March 28, 1999 and for the year ended December 27, 1998 and
the Unaudited Pro Forma Condensed Balance Sheet as of March 28, 1999 give effect
to Crown Vantage Inc.'s (the "Company") sale of its pulp and paper mills in
Berlin and Gorham, New Hampshire ("Berlin-Gorham") to American Tissue Inc.
("American Tissue"). Proceeds from the sale of Berlin-Gorham to American Tissue
totaled $45 million in cash plus the assumption by American Tissue of certain
liabilities. The pro forma information is based on the historical consolidated
statements of the Company after giving effect to the pro forma adjustments
described in the Notes to the Unaudited Pro Forma Condensed Financial
Statements. The pro forma financial data are not necessarily indicative of the
results that actually would have occurred had the sale of Berlin-Gorham to
American Tissue been consummated on the dates indicated or that may be obtained
in the future.
CROWN VANTAGE INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
12 MONTHS ENDED DECEMBER 27, 1998
(amounts in 000's except per share amounts)
HISTORICAL HISTORICAL
CROWN BERLIN- PRO-FORMA
VANTAGE GORHAM (a) ADJUSTMENTS PRO-FORMA
---------- ----------- ----------- -----------
Net Sales $ 850,994 $ (162,873) $ 19,981 (b) $ 708,102
Cost of Goods Sold 796,935 (176,202) 17,583 (b)
2,074 (c) 640,390
---------- ----------- ----------- -----------
Gross Margin 54,059 13,329 324 67,712
Asset Impairment and Other Charges 163,834 (143,632) 20,202
Selling and Administrative Expenses 62,360 (4,115) (d)
(640) (e)
(2,300) (f) 55,305
---------- ----------- ----------- -----------
Operating Income (Loss) (172,135) 156,961 7,379 (7,795)
Interest Expense (64,672) 2,479 (g) (62,193)
Other Income, net 1,400 (85) 1,315
----------- ----------- ----------- -----------
Income (Loss) Before Income Taxes and
extraordinary item (235,407) 156,876 9,858 (68,673)
Income Tax Provision (Benefit) (75,912) 77,903 (h) 1,991
----------- ----------- ----------- -----------
Net Income (Loss) before
extraordinary item $ (159,495) $ 156,876 $ (68,045) $ (70,664)
=========== =========== =========== ===========
Loss per share before extraordinary item $ (16.79) $ (7.44)
Average common stock and
common stock equivalents 9,502 9,502
CROWN VANTAGE INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
3 MONTHS ENDED MARCH 28, 1999
(amounts in 000's except per share amounts)
HISTORICAL HISTORICAL
CROWN BERLIN- PRO-FORMA
VANTAGE GORHAM (a) ADJUSTMENTS PRO-FORMA
---------- ----------- ----------- -----------
Net Sales $ 201,165 $ (40,125) $ 5,037 (b) $ 166,077
Cost of Goods Sold 193,043 (38,293) 4,432 (b)
468 (c) 159,650
----------- ----------- ----------- -----------
Gross Margin 8,122 (1,832) 137 6,427
Asset Impairment and Other Charges 16,175 (16,175)
Property Tax Accrual Reversal (8,957) 8,957
Selling and Administrative Expenses 15,424 (981) (d)
(160) (e)
(575) (f) 13,708
----------- ----------- ----------- -----------
Operating Income (Loss) (14,520) 5,386 1,853 (7,281)
Interest Expense (15,552) 620 (g) (14,932)
Other Income, net 142 (21) 121
----------- ----------- ----------- -----------
Income (Loss) Before Income Taxes (29,930) 5,365 2,473 (22,092)
Income Tax Provision 432 (42) (h) 390
----------- ----------- ----------- -----------
Net Income (Loss) $ (30,362) $ 5,365 $ 2,515 $ (22,482)
=========== =========== =========== ===========
Loss per share $ (2.93) $ (2.17)
Average common stock and
common stock equivalents 10,351 10,351
CROWN VANTAGE INC.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
MARCH 28, 1999
(amounts in 000's)
HISTORICAL
CROWN PRO FORMA
VANTAGE ADJUSTMENTS PRO FORMA
---------------- ----------------- ---------------
ASSETS
Current Assets
Cash $ 11,230 $ 11,230
Inventory 72,775 72,775
Asset held for sale 45,000 $(45,000) (a)
Other current assets 56,531 56,531
---------------- ----------------- ---------------
Total current assets 185,536 (45,000) 140,536
PP&E, net 378,664 378,664
Other assets 80,288 80,288
---------------- ----------------- ---------------
Total assets $ 644,488 $(45,000) $ 599,488
================ ================= ===============
LIABILITIES
Current liabilities $ 97,520 $(17,000) (g) $ 80,520
Long-Term liabilities
Long-term debt 585,423 (28,000) (g) 557,423
Post retirement benefits 85,084 85,084
Other long-term liabilities 45,336 45,336
---------------- ----------------- ---------------
Total liabilities 813,363 (45,000) 768,363
Shareholders' Equity (Deficit)
Common stock and other 45,831 45,831
Retained deficit (214,706) (214,706)
---------------- ----------------- ---------------
Total liabilities and deficit $ 644,488 $(45,000) $ 599,488
================ ================= ===============
CROWN VANTAGE INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
(a) Elimination of Berlin-Gorham's historical income statement and net assets
held for sale on the balance sheet. The Unaudited Pro Forma Condensed
Income Statements are presented assuming the sale occurred at the beginning
of the periods presented. The Unaudited Pro Forma Condensed Balance Sheet
is presented assuming the sale occurred on the balance sheet date.
(b) Effective with the sale of Berlin-Gorham, the Company entered into a three
year Strategic Alliance Agreement ("SAA") with American Tissue that
provides that the Company retains the rights to certain grades of paper
critical to its uncoated printing and publishing papers strategy. Berlin-
Gorham will continue to manufacture these papers on behalf of the Company.
The Company will market these grades (a minimum of 20,000 tons per year)
and collect a commission based on the net sales price of these grades. The
pro forma adjustment was calculated by applying the contractual commission
to actual net sales of these grades for the periods presented.
(c) Effective with the sale of Berlin-Gorham, the Company entered into a three
year Pulp Purchase Agreement ("PPA") that provides for the purchase of
40,000 tons of pulp from Berlin-Gorham at a discount off of quoted market
prices. The pro forma adjustment reflects the estimated cost difference
between the historical transfer costs of pulp from Berlin-Gorham to the
Company's other mills and the estimated costs under the PPA.
(d) Effective with the sale of Berlin-Gorham, the Company entered into a three
year Paper Brokerage Agreement ("PBA") that provides for the Company to
continue marketing and selling certain uncoated freesheet papers
manufactured by Berlin-Gorham not covered under the SAA (estimated at
130,000 tons annually). The Company will collect a commission on these
sales based on the net sales price. The pro forma adjustment was calculated
by applying the contractual commission to actual net sales of these grades
for the periods presented.
(e) As a result of the sale, management estimates that average accounts
receivable eligible for sale under its securitization facility would have
been reduced by approximately $8 million for the periods presented. The
estimated reduction is approximately the same for all periods presented.
This will result in a corresponding decrease in selling and administrative
expenses associated with this facility.
(f) The Company has agreed to provide certain transition services for Berlin-
Gorham. The transition services agreement provides for reimbursement to the
Company for certain general and administrative costs. The reimbursement is
contractually set at a rate per month based on the estimated costs to the
Company to perform these services.
(g) Reduction in interest expense reflects the pay down of term and revolver
debt based on the estimated net proceeds from the sale. Net proceeds
available for debt reduction is estimated to be $28 million with a minimum
prepayment of $10 million to Term Loan B and the remainder to the Revolving
Credit Facility. The amount of net cash proceeds available for debt
reduction would not have materially varied for the periods presented. Cash
proceeds of $45 million from the sale are reduced by transaction costs and
certain current liabilities of Berlin-Gorham retained by the Company. Net
proceeds available for debt reduction are calculated as follows (amounts in
millions):
Cash proceeds $45.0
Transaction fees 1.8
Accounts payable and accrued liabilities 15.2
-----
Total $28.0
=====
(h) The pro forma adjustment gives income statement effect to a valuation
allowance against deferred tax benefits recognized for the period ended
December 27, 1998. The adjustment also eliminates state and value-added
taxes pertaining to Berlin-Gorham.